ICICI Bank 2016 Annual Report Download - page 220

Annual Report 2015-2016218
Schedules
forming part of the Consolidated Accounts (Contd.)
Consolidated Financial Statements
The employees of the overseas branches of the Bank contribute a certain percentage of their salary and the overseas
branches contribute an equal amount for eligible employees towards respective government schemes. The
contribution by the overseas branches is recognised in prot and loss account at the time of contribution.
Leave encashment
The Group provides for leave encashment benet based on actuarial valuation conducted by an independent actuary.
11. Provisions, contingent liabilities and contingent assets
The Group estimates the probability of any loss that might be incurred on outcome of contingencies on the basis
of information available upto the date on which the consolidated nancial statements are prepared. A provision is
recognised when an enterprise has a present obligation as a result of a past event and it is probable that an outow of
resources will be required to settle the obligation, in respect of which a reliable estimate can be made. Provisions are
determined based on management estimates of amounts required to settle the obligation at the balance sheet date,
supplemented by experience of similar transactions. These are reviewed at each balance sheet date and adjusted
to reect the current management estimates. In cases where the available information indicates that the loss on the
contingency is reasonably possible but the amount of loss cannot be reasonably estimated, a disclosure to this effect
is made in the consolidated nancial statements. In case of remote possibility, neither provision nor disclosure is
made in the consolidated nancial statements. The Group does not account for or disclose contingent assets, if any.
The Bank estimates the probability of redemption of customer loyalty reward points using an actuarial method by employing
an independent actuary and accordingly makes provision for these reward points. Actuarial valuation is determined based
on certain assumptions regarding mortality rate, discount rate, cancellation rate and redemption rate.
12. Cash and cash equivalents
Cash and cash equivalents include cash in hand, balances with RBI, balances with other banks and money at call and
short notice.
13. Investments
i) Investments of the Bank are accounted for in accordance with the extant RBI guidelines on investment
classication and valuation as given below.
a) All investments are classied into ‘Held to Maturity’, ‘Available for Sale’ and ‘Held for Trading’. Reclassications,
if any, in any category are accounted for as per the RBI guidelines. Under each classication, the investments
are further categorised as (a) government securities, (b) other approved securities, (c) shares, (d) bonds and
debentures and (e) others.
b) ‘Held to Maturity’ securities are carried at their acquisition cost or at amortised cost, if acquired at a premium
over the face value. Any premium over the face value of xed rate and oating rate securities acquired is
amortised over the remaining period to maturity on a constant yield basis and straight line basis respectively.
c) ‘Available for Sale’ and ‘Held for Trading’ securities are valued periodically as per RBI guidelines. Any premium
over the face value of xed rate and oating rate investments in government securities, classied as ‘Available
for Sale’, is amortised over the remaining period to maturity on constant yield basis and straight line basis
respectively. Quoted investments are valued based on the trades/quotes on the recognised stock exchanges,
subsidiary general ledger account transactions, price list of RBI or prices declared by Primary Dealers Association
of India jointly with Fixed Income Money Market and Derivatives Association (FIMMDA), periodically.
The market/fair value of unquoted government securities which are in the nature of Statutory Liquidity
Ratio (SLR) securities included in the ‘Available for Sale’ and ‘Held for Trading’ categories is as per the rates
published by FIMMDA. The valuation of other unquoted xed income securities, including Pass Through
Certicates, wherever linked to the Yield-to-Maturity (YTM) rates, is computed with a mark-up (reecting
associated credit risk) over the YTM rates for government securities published by FIMMDA.
Unquoted equity shares are valued at the break-up value, if the latest balance sheet is available or at ` 1, as
per RBI guidelines.